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2016 (3) TMI 1307 - HC - Central ExciseCENVAT/MODVAT Credit - duty paying documents - credit availed on the basis of fake documents without actual receipt of goods - right of cross-examination denied - Held that - The right of the petitioners being effected regarding cross-examination, the order of the Assessing Officer (Annexure P/5) was quashed by the Commissioner of Customs and Central Excise and upheld by the Income Tax Tribunal - the petition is premature and cannot be allowed as a means of stifle the proceedings pending before the Criminal Court - petition dismissed.
Issues:
1. Quashment of criminal case proceedings under Section 482 of Cr.P.C. 2. Prematurity of the petition and availability of alternative remedies. 3. Allegations of fake documents and Modvat credit misuse in Central Excise case. Issue 1: Quashment of Criminal Case Proceedings The petitioners sought quashment of Criminal Case No. 10/1998 pending in the Court of Special Judicial Magistrate (CBI and Economic Offences), Indore. The counsel for the petitioners argued that the prosecution's foundation, based on suggestions from the Income Tax Department, had been quashed by the Income Tax Appellate Authority and Tribunal. It was contended that continuing the prosecution after the basis had been invalidated would amount to an abuse of the legal process. On the contrary, the respondent's counsel argued that the petition was premature, as other avenues for redressal were available to the petitioners. The respondent emphasized that the trial was in progress, witnesses had been examined, and quashing the proceedings would obstruct the legal process. The respondent cited legal precedents to support the argument that the petition lacked merit and should be dismissed. Issue 2: Prematurity of the Petition and Alternative Remedies The dispute centered around a complaint filed by Central Excise and Customs, alleging misuse of Modvat credit based on fake documents by a company and associated trading firms. The petitioners challenged show cause notices and the initiation of proceedings. The Commissioner of Customs quashed the Assessing Officer's order, which was upheld by the Income Tax Tribunal. The court noted that the criminal case was ongoing, and the petitioners had alternative remedies against the Commissioner's order. It was concluded that the petition was premature and could not be used to halt the proceedings before the Criminal Court, as the petition lacked merit. Issue 3: Allegations of Fake Documents and Modvat Credit Misuse The complaint involved a search operation at a company's premises, alleging that the company availed Modvat credit based on fake documents without actual receipt of goods. The trading firms associated with the company were suspected of being indirectly controlled by the company through a commission agent. Statements recorded under the Central Excise Act led to the initiation of proceedings for offenses under the Central Excise Act, 1944. Despite challenges to show cause notices and proceedings, the case progressed, with the Income Tax Authorities getting involved. The petitioners' rights regarding cross-examination were affected, leading to the quashing of the Assessing Officer's order by the Commissioner of Customs and Central Excise, a decision upheld by the Income Tax Tribunal. The court acknowledged the ongoing nature of the proceedings and the availability of alternative legal remedies, dismissing the petition as premature and lacking merit. This detailed analysis of the judgment from the Madhya Pradesh High Court highlights the arguments presented by both parties, the legal precedents cited, and the court's decision on the issues of quashment of criminal case proceedings, prematurity of the petition, and the allegations of fake documents and Modvat credit misuse in the Central Excise case.
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